Canada Considers Taxing Foreign Online Service Providers

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Canada has proposed a law that will impose taxes on streaming platforms such as Netflix and Spotify, as well as other online services like Amazon. The tax proposal was discussed in the government's Fall Economic Statement. It is one of Prime Minister Justin Trudeau’s initiatives to address complaints by Canadian business owners that a loophole in the law is allowing foreign companies that offer digital services to avoid taxes. Currently, companies that do not have a physical office in Canada are not required to pay taxes. Finance Minister Chrystia Freeland suggested imposing the sales tax on digital services starting July 1, 2021. Some Canadian provinces such as British Columbia and Quebec, however, have already been imposing taxes on streaming services since the first few months of 2020. Freeland said that Canadians want an equitable tax system where everyone pays taxes fairly to ensure that the government will have enough funds to support the economy. Through the tax plan, the Canadian government expects to gain up to $6.5 billion in revenue over the next five years. Despite its projected benefits to the economy, some are not in favor of the proposal. The federal broadcast regulator says that taxes on digital services would only be passed down to consumers. To prevent that from happening, the institution suggested requiring foreign streaming services to invest in Canadian programming instead.